European Shares Set For Cautious Start

2/6/2012 2:00 AM ET

European shares are seen opening flat to slightly lower on Monday as talks on a debt agreement for Greece dragged on. Asian stocks are trading mixed and the euro weakened against the dollar before Greek political leaders resume talks today after failing to bridge differences on reforms required by
the International Monetary Fund, the European Central Bank and the European Commission, known collectively as the troika.

On the macroeconomic front, confidence among British small-scale manufacturers declined for a third consecutive quarter during the three months to January, the results of a survey by the Confederation of British Industry, or CBI, revealed.

CBI's quarterly SME Trends survey showed that manufacturers' sentiment regarding general business conditions fell due to a decrease in domestic as well as export orders. The ongoing concerns regarding the Eurozone debt crisis have added to the uncertainty over demand and growth.

Industrial orders from Germany and Eurozone sentix investor confidence are the other major economic reports due later in the session. Meanwhile, France will conduct a T-bill auction, with the government aiming to raise raise EUR 4.2 billion through the sale of 91-day bills, EUR 2.1 billion from 182-day T-bills and EUR 2.2 billion from 364-day bills.

In corporate news, British telecom giant Vodafone Group Plc has called off its talks with Largo about merging their operations in Greece amid concerns that the deal would not meet EU regulations, media reports suggest.

Troubled Franco-Belgian bank Dexia Group is nearing a deal wherein two of France's state-owned entities are set to acquire Dexia's French municipal-lending unit, Dexma, the Wall Street Journal reported.

France's Technip said it was granted by Tullow Ghana two contracts, worth about 100 million euros, for the Phase 1A of the Jubilee project.

British lender Barclays Plc, which is expected to announce its financial results on Friday, may announce a 1.5 billion pounds bonus pool for its investment bankers along with the earnings announcement, the Sunday Telegraph reported.

European shares rose on Friday to hit a fresh six-month high after data showed euro-zone private-sector activity returned to modest growth in January and strong U.S. jobs data fueled optimism for a recovery in the world's largest economy.

The Euro Stoxx 50 index of eurozone bluechip stocks advanced 1.5 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, added 1.6 percent, while around Europe, Switzerland's SMI, France's CAC 40, the German DAX and the U.K.'s FTSE 100 ended up between 1.5 percent and 1.8 percent.

Likewise, U.S. stocks rose sharply on Friday as a strong jobs report and data showing a sharp jump in services sector activity to an eleven-month high in January helped bolster investor sentiment. The Dow rose 1.2 percent to end the session at its best closing level in over three years and the tech-heavy Nasdaq gained 1.6 percent to reach an eleven-year closing high, while the S&P 500 ended up 1.5 percent.